Legislature(2007 - 2008)BELTZ 211
04/26/2007 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB140 | |
| SB102 | |
| SB28 | |
| SB118 | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 118 | TELECONFERENCED | |
| + | HB 121 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 140 | TELECONFERENCED | |
| += | SB 102 | TELECONFERENCED | |
| += | SB 28 | TELECONFERENCED | |
SB 102-MORTGAGE LENDING
1:38:50 PM
CHAIR ELLIS announced SB 102 to be up for consideration. The
committee was working from version C committee substitute.
LYNEA OLSON, Vice President, CitiGroup, opposed SB 102 saying
while CitiGroup supported regulation of the mortgage industry,
corporate state licensure, and granting the department
regulatory and enforcement powers over them, they oppose the
current version of SB 102because it would require them to
license employees and exclusive agents of large national
lenders. She said a majority of states have implemented a more
reasonable licensing scheme where they allow an exemption for
large national lenders including CitiGroup.
MS. OLSON said that corporate licensure would protect consumers
and that CitiGroup would agree with the department to post a
surety bond so an injured borrower could be made whole. She said
the corporate licensure would make sure that its employees and
exclusive agents are in compliance with Alaska law.
1:40:51 PM
SENATOR STEVENS joined the committee.
MS. OLSON also explained that CitiGroup has internal training
procedures, supervision, audits, and surveillance and compliance
procedures in place.
CHAIR ELLIS said he appreciated her testimony, but the issue is
a balancing act between access to credit for Alaskan consumers
and the consumer protection and responsibility of the various
players in that market. He said that Senator Huggins, the
sponsor, is willing to continue discussing the bill.
SYMON KEYMER, State Government Affairs, American Financial
Services Association (AFSA), said AFSA is a national trade
association based in Washington D.C. and its members are
financial services companies that provide credit for consumers
and small businesses including many mortgage lenders. He said
that AFSA still opposes the current bill.
He said AFSA had submitted amendment language in the past and
worked with the Division of Banking and Securities, but had not
come to an agreement. He asked that the bill be held over to
give them more time to address the legal and technical issues
that must be addressed for effective regulation of the industry.
If passed as it stands, SB 102, version C, will fly in the face
of practices in over 40 other states. It will significantly
increase the burden on Alaska's lenders, regulators and
consumers and add costs to lenders that they will pass on to
borrowers. It could also have a negative effect on compliance
activities for regulators.
MR. KEYMER said the belief that reciprocal regulation with other
states will do away with duplicative, onerous and expensive
employee licensing is not a realistic option and he didn't know
of any state that currently provides for originator licensing
reciprocity. He said that regulators in other states have been
willing to adopt exemptions for employees and exclusive agents
of well-capitalized and highly regulated entities like AFSA
members to conserve state resources. Regulators have realized
that placing financial and supervisory responsibility squarely
on corporate entities who have the financial stability, internal
training programs, corporate supervision and the accountability
of AFSA member companies allows them to devote more resources to
greater oversight and accountability for those industry players
who do not.
1:46:01 PM
MR. KEYMER said it is also difficult to pass regulations because
each industry player is different. He explained:
State and federal lenders and independent mortgage
brokers are regulated differently because they operate
differently. Large mortgage lenders differ
significantly from independent mortgage brokers. They
typically operate as license entities in multiple
states and have a large number of employees who
interact with customers from many states on a daily
basis. They are well-capitalized, carry huge
reputation risks associated with employee misconduct
and may be affiliated with an entity regulated by the
Federal Reserve Board.
Effective mortgage loan originator licensing must
recognize these differences between large mortgage
lenders and independent mortgage brokers and must
recognize the difference between inter-state companies
and large multi-state companies. Duplicative or
overlapping licensing of large multi-state entities
and individuals should be avoided.
As far as enforcement is concerned, nothing in the
AFSA amendment would limit the supervisory and
important powers of the department. As employees and
exclusive agents of a licensed company, these
individuals would only be subject to provisions of the
acts applicable to their license. In addition to this,
the bill grants broad authority to both the department
and the attorney general to enforce the provisions of
the act against any person as well as any licensee.
This broad authority would allow the department to
enforce these provisions of the act against AFSA
member companies and their employees and exclusive
agents.
There are other protections in the AFSA amendment. The
amendment would require as part of the license that
the company sign a binding written agreement with the
department stating that they accept full
responsibility for insuring that the employee acts in
full compliance with this chapter. This agreement
could include requirements such as employee background
checks, continuing education, and other items deemed
necessary by the department. The department would also
have the ability to examine the company to insure
compliance with the act and the department would have
legal authority to review any loan made by a licensed
company. The details of these requirements would be
worked out in regulation.
The amendment also requires the company to maintain a
bond in an amount required by the department to
benefit the state or any person who suffers loss by
the violation of this chapter. The licensed company
would also have to make a one-time filing with the
department for an exemption from licensure for its
employees or exclusive agents.
1:48:32 PM
In conclusion, we note that the Senate passed a bill,
SB 272, last year that AFSA and its members were
entirely comfortable with. This year we had
enthusiastically agreed to corporate licensure and in
good faith believed that we had agreed with the
department to a concept whereby lenders themselves
would be regulated, but the employees and exclusive
agents of large multi-state mortgage lenders would not
be licensed individually. This has now proved not to
be the case. Nevertheless, we believe that such a
concept is the best way to balance consumer protection
with wide access to credit for the people of Alaska.
1:49:05 PM
CHAIR ELLIS thanked Mr. Keymer for his testimony. He noted that
the committee has relied on Mark Davis, the director of the
Division of Banking and Securities for his expertise and
interpretation of the state interest in this legislation. He
said that he feels caught short on the technical issues, but for
this bill to pass this year with its considerable consumer
protections, it needs to move on its way. The sponsor has said
he will continue the conversation at the finance level and
another bill is in motion in the other body.
1:50:05 PM
SENATOR STEVENS moved to pass CSSB 102(L&C) from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
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